The Fresh Winner in Discount Retail March 2019 We are the fastest - - PowerPoint PPT Presentation
The Fresh Winner in Discount Retail March 2019 We are the fastest growing grocery retailer in Turkey 1,000 TL12.1bn 6,364 New Stores Turnover (1) Stores (2) opened (1) 35% 17% TL630m Revenue LFL sales EBITDA (1) Growth (1) growth (3)
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Stores(2)
SKUs
Turnover(1)
EBITDA(1)
Revenue Growth (1)
LFL sales growth(3)
New Stores
Source: Management information. (1) As of FY2018A. (2)
(3) Şok stores only. Like-for-like sales for FY2018 calculated on the basis of daily net sales generated in 2018 by stores operating on 31 Dec 2016 and that were still open on 31 Dec 2018.
Warehouses(1)
1.325 3.584 8.713 12.06 1
2012A 2014A 2017A 2018A
▪ Organic growth ▪ Debt free & Strong Equity ▪ Increasing profitability ▪ White Space Opportunity
1.144 2.301 5.100 6.364
2012A 2014A 2017A 2018A
3 Phase I: 2011-2014 Phase II: 2015 Phase III: 2015
Stores
▪ Acquisition of DiaSA & Onurex ▪ Refined SKU & product mix ▪ Introduced strong Private Label brands ▪ New management ▪ New discount format enhancing shopping experience ▪ Introduced Fresh & Personal Care
Acquisition of Şok from Migros -2011
Sales (TLm)
▪ c.2,700 stores transformed in 2016 and 2017 ▪ Strong store opening of c.1,000 stores p.a. ▪ Şok became fastest growing retailer in the market Phase IV:2018- … 4.6x 8.1x
Acquisitions & Integration New Format Design Transformation & Organic Growth Post IPO Period
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Source: 2016-18A Nielsen for Traditional, Modern & Discount growth rate (CAGR), Management information for Şok growth rate.
16% 14% 20% 33% 39%
Total Traditional Modern Discount (incl. Şok) Şok
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Source: Nielsen Data & MK Novo Analysis.
Large base of traditional stores still exists Modern penetration significantly lower than
Wave of Change in Turkey
172 167 165
2016 2017 2018
28 30 33
2016 2017 2018
Evolution of Store # by Channel (‘000) Modern Retail Traditional Retail
Turkey Behind Other European Markets
40% 42% 43% 45% 66% 81% 85%
60% 58% 57% 55% 34% 19% 15%
2016 2017 2018 2023P Russia Poland Germany
Share of Grocery Market (value) Turkey Traditional Modern 2018
Forecast
Source: Nielsen (1) Data as of 2018. (2) Average Store Size figures represents an average selling area for each retail model consisting of multiple formats with different store sizes. National supermarket have multiple retail formats that include hypermarkets and large supermarkets (>1000 sqm), supermarkets (>400sqm) and small store formats (<400 sqm). Local supermarkets and mom & pop also include a wide range of different store formats.
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L4
Supermarket National Players Supermarket Local Players Discounters Mom & Pop’s / Others Modern Channel Traditional Channel
Number of Players(1)
2,394 9,496 21,250 8% 16% 19% c.164,994 57%
Number of Stores(1)
Total Selling Area (‘000 sqm)(1) Revenue Growth 2016-2018 Market Share(1) Market Share Change 2016-2018
2 c.400 3 c.164,994 2,388 6,448 5,053 7,068 24% 2% 33% 14% 1.6% (3.1%) 4.3% (2.9%)
Average Store Size (sqm)(1)(2)
c.1,000 c.680 c.240 c.45 (As of 2018)
39% 30% 13%
Şok Other Discounters Supermarkets
Total Grocery Market Share Discount Market Share
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Source: Management information, Nielsen
Revenue Growth ’16-’18A (CAGR) # of Stores Growth ’16-’18A (CAGR) Şok’s Market Share ’16-’18A(1)
26% 13% 0,4%
Şok Other Discounters Supermarkets
3,6% 5,2% 25,3% 27,9%
2016 2018
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Most relevant product choice, differentiated by strong fresh, tobacco & personal care
Experts in convenient small-box format Competitive everyday low prices and effective promotions Unrivalled choice
and heritage exclusive brands among discounters Carefully engineered, enjoyable atmosphere, easy shopping experience
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6,364(1) stores across every city in Turkey National store footprint conveniently located in your neighbourhood Small-box format maximizing options for site locations
size: 218sqm(1) Small-box format maximizing options for site locations
223sqm(2)
11 - 20 arası 1 - 10 arası
189 Mersin Adana 129 Antalya 366 Karaman 9 Muğla 121 Aydın 118 Hatay 109 İzmir 458 Denizli 65 Burdur 18 Isparta 42 Konya 50 Niğde 14 Afyon 39 Uşak 16 Osmaniye 25
Kahramanmaraş
39 Şanlıurfa 40 Manisa 105 Balıkesir 207 Kütahya 41 Eskişehir 72 Ankara 367 Bursa 229 Çanakkale 41 Yozgat 23 Sivas 33 Kayseri 134 Aksaray 15 Bolu 19
Sakarya
97
Edirne
27 Kilis 6 Gaziantep 61 Mardin 16 Kırklareli 28 Tekirdağ 113 Bilecik 22 Çorum 30 Kırşehir 16 Nevşehir Kırıkkale 24 25 Adıyaman 22 Diyarbakır 54 Şırnak 3 Hakkari 2 Malatya 19 Tokat 35 Amasya 37 Van 24 Ağrı 22 Iğdır 9 Çankırı 14 Siirt 4 Bitlis 6 Batman 12 Elazığ 27 Tunceli 1 Erzincan 17 Bingöl 15 Muş 2 Erzurum 69 Kars 26 Ardahan 9 Artvin 22 Kastamonu 25 Sinop 27 Samsun 111 Ordu 34 Giresun 25 Gümüşhane 11 Bayburt 9 Trabzon 67 Rize 25
Düzce
26 Karabük 21 761
İst.Anadolu
474Kocaeli 136 Zonguldak 64 Bartın 32
Yalova
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İst.Avrupa
NUMBER OF STORES
Between 101 - 1.000
Between 51 - 100 Between 21 - 50 Between 1 - 20
Experts in convenient small- box format
(1) (1) As of 2018 (2) (2) Only for Şok Stores
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Description Promotion type 50% off Buy 1 product, second product 50% off Check-out offers Cashier offers product at check-out 25 TL basket Discount on specific product if basket > TL 25 In&Out Offers on selected non-food products
✓ ✓
✓ ✓ ✓ ✓ Everyday Low Price Model Greater Variety of Highly Effective, Regular Promotions, Determined on a Network-Wide Basis
competitors: Price match or below on all national branded products
Discount Competitor Supermarket Competitor
vs. Discount competitors: Price match on all comparable products Discount Competitor 1
✓
Discount Competitor 2
Competitive everyday low prices and effective promotions
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# of core SKUs (December 2018)
1.500 c.700 Şok Discount Competitor 1
95% 76% % of customer needs covered
Broad Portfolio of SKUs Covering More Customer Needs
▪ 70% Grocery ▪ 13% Tobacco ▪ 6% Non-food spot items ▪ 7% Fruit & Vegetables (Fresh) ▪ 3% Personal care ▪ 1% Other
% of FY2018A Şok Store sales
Fresh Personal Care Tobacco National or Exclusive Brand Choice for Almost Every Customer Need
Fresh, Personal Care, Non-Food and Tobacco Differentiate and Drive Traffic
Most relevant product choice, differentiated by strong fresh, tobacco & personal care offering
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Food Beverage Personal care Home Care
% sales # brands # SKUs Examples
Other Brands We price our well-known heritage brands at same level as competitors’ own brands
Exclusive Brands
29% 46 466 Heritage Brands selling #1 brand for almost every category available
National Brands
44% (vs. 27% for Discount Competitor 1) 240 884 (vs. 194 for Discount Competitor 1)
Since 1970s Since 1980s Since 1920s Since 1970s Since 1970s
Unrivalled choice of national brands and heritage exclusive brands among discounters
Source: Management information.
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Source: Management information. (1) Average 2018. Source: Mia Organizasyon Restorasyon Yayıncılık (Günışığı Kitaplığı); Score range: 0-49 (Inadequate), 50-60 (Medium), 70-84 (Good), 85-100 (Excellent).
Fresher 55 modules Mid-high section On-Shelf Availability Visibility & Natural light Eye- catching Differentiated consumer offering reflected in excellent Mystery Shopper score of 87(1)
Carefully engineered, enjoyable atmosphere, easy shopping experience
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Most relevant product choice, differentiated by strong fresh, tobacco and personal care offering
Competitive everyday low prices and effective promotions
Experts in convenient small-box format
Carefully engineered, enjoyable atmosphere, easy shopping experience Unrivalled choice of national brands and heritage exclusive brands
Choice Price Experience Proximity Brands
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Highly Effective Communication Our People Integrated IT Infrastructure Carefully Engineered In-Store Execution Disciplined Store Roll-out Process Efficient Logistics Management Collaborative & Accountable Procurement
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Standarised Modular Layout
EXIT
CHECK OUT AREA PROMOTION AREA GROCERY PERSONAL CARE BAKERY FRESH AREA HOUSEHOLD & CLEANING
ENTRANCE
DAIRY FRUIT AND VEGETABLES
Harmonised layout supports rapid roll-out Shelving carefully engineered to maximise offering Suppliers provide customised box packaging of 39cm for simple & fast replenishment
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# Modules Planogram Layout
174 cm 90 cm 90 cm
Optimised Shelving and Packaging Simplicity leads to optimisation of personnel – from 4.7 per Şok store in Dec-14 to 3.9 in Dec-18
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Average 255 stores per distribution centre Discount Competitor 1: 110 Vertical stacks for demand growth / storage
Source: Management Information. (1) As of 31 December 2018.
33 branches supplied by 25 distribution centres(1); all rented
Fully Integrated Logistics Management Business Model Oriented Distribution Centre Management
Over 500 suppliers connected via B2B reporting OBASE ERP Automated ordering system, with store manager approval 3x per week
Supplier
B2B Connectivity
Distribution Centre (DC)
Store Connectivity
Stores
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Long term growth strategy is at the heart of our roll-out approach
Portfolio Creation Detailed Location Analysis Candidate Store Selection & Approval
Location Store size > 200 sqm Layout appropriateness Feasibility of investment
Contract Process
Preparations to Sales Construction Signature Legal Consultancy Contract Preparation
15 0.5 2.5 2.0 7.0 3.0 days Days
Annual Growth Plan
500m> 500m<>1000m 3,100 8,040 1,900 4,930 1,030 2,670 5,500 5,500 200 510 310 800 1,430 3,720 1,670 4,320 640 2,000 1,360 3,520 1,100 2,520Competitors
User selects area in Maptriks to generate a query on store potential Analysis of demographic data within 500m and 1000m radius of candidate location 1. Average Income Level 2. Population 3. Competition Determination of # of Stores per District 1. Main roads 2. Secondary streets 3. Commercial district 4. Competition analysis Physical Location
A B C D E
City New Stores Target Year End Target Istanbul 175 1,650 Ankara 85 386 Bursa 60 246 Izmir 60 470 Antalya 50 374 Other +570 3,274 Total 1,000 6,400 (Example: 2018 Growth Plan)
9 199 258 699 1.000 1.100 1.264
2012A 2013A 2014A 2015A 2016A 2017A 2018A
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Şok Net Stores Opened
5,100 4,000 3,000 2,301 2,043 1,144
*264 Şok Mini Stores
Underperforming stores reported on daily/weekly basis and supported with weekly promotions 10-year lease all in TL (1 month notice period to cancel lease) Average TL 250k per new store, If closed, c.80% of CAPEX is recoverable and can be transferred to another store
6,364
264*
Total Number of Stores
TL 5 million average CAPEX per new warehouse
4.480 6.174 8.920 12.061 2.475 3.351 2015A 2016A 2017A 2018A 4Q'17 4Q'18 21
Revenue Evolution Fastest growing Turkish grocery retailer
Source: Management Information. .
TLm
3,000 4,000 5,100
* Like-for-like sales for FY2018 calculated on the basis of daily net sales generated in 2018 by stores operating on 31 Dec 2016 and that were still open on 31 Dec 2018.
6,364
22 LFL Number of Tickets Growth LFL Basket Size Growth Like-for-Like Growth
YoY, growth YoY, growth
10,4% 11,7% 15,7% 17,0% 19,8% 2015A 2016A 2017A 2018A 4Q'18 4,0% 2,3% 4,6% 4,4% 2,8% 2015A 2016A 2017A 2018A 4Q'18
YoY, growth
1,782 2,129 2,900
Number of LFL stores
6,1% 9,2% 10,7% 12,0% 16,5% 2015A 2016A 2017A 2018A 4Q'18 3.766
Basket driven by availability of fresh produce and effective promotions c.1,000 stores added every year in the past 3 years Refurbished stores, SKU count, convenience driving traffic
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Evolution of Gross Margin Improvement in gross margins driven by economies of scale Use of exclusive brands creating additional bargaining power
4.480 6.174 8.920 12.061 577 826
20,9% 21,9% 23,0% 24,3% 23,3% 24,6%
0,16 0,17 0,18 0,19 0,2 0,21 0,22 0,23 0,24
2015A 2016A 2017A 2018A 4Q'17 4Q'18
2000 4000 6000 8000 10000 12000 14000 16000 18000
Revenue Gross Margin
Evolution of Operating Expenses / Sales
999 1.324 1.874 2.504 507 704
22,3% 21,4% 21,0% 20,8% 20,5% 21,0%
16,0% 17,0% 18,0% 19,0% 20,0% 21,0% 22,0% 23,0% 24,0%
2015A 2016A 2017A 2018A 4Q'17 4Q'18
1000 2000 3000 4000 5000 6000 7000 8000
Opex Opex as % of Sales
Centralised executive management for SG&A cost management Cost-centric approach to personnel, transportation and rent
(1) 110 354 630 116 175
(0,0%) 1,6% 4,0% 5,2% 4,7% 5,2%
100 200 300 400 500 600 700
2015A 2016A 2017A 2018A 4Q'17 4Q'18
0,30% 1,30% 2,30% 3,30% 4,30% 5,30%
EBITDA EBITDA Mmargin
24 From Breakeven in 2015, c.500 bps Improvement in EBITDA
Evolution of EBITDA
Improvement driven by procurement scale and
(TL in millions)
178 356 432 337 85 71
4,0% 5,8% 4,8% 2,8% 3,4% 2,1%
200 400 600 800 1000 1200 1400 1600 1800 2000
2015A 2016A 2017A 2018A 4Q'17 4Q'18
0,01 0,02 0,03 0,04 0,05 0,06 0,07 0,08
CAPEX CAPEX/Net Sales 2,0 18,0 253,5 38,1 25,4
HQ Warehouse New Stores New Stores (Şok Mini) Maintenance Store Transformation
5,8 36,6 243,5 4,9 42,8 97,9
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1.000 New Stores Openings 1.100 New Stores Openings
TLm Short Term Borrowings 75,4 1.402,4 Obligations under Financial Lease(1) 208,8 306,6 Related Party Debt
Total Debt 284,2 2.322,3 Cash & Cash Equivalents 296,4 92,1 Net Cash / (Debt) 12,1 (2.230,2) (434,0) 67,0
31.12.2017 31.12.2018
Equity Net Income
(2.230) 12 31.12.2017 31.12.2018 31.12.2017
26 6,4X
(1) Financial lease agreements for new store openings Net Debt / EBITDA
(2.185) 263 31.12.18 31.12.17
(1.289) (1.485)
31.12.2017 31.12.2018
31.12.2018 31.12.2017 31.12.2018
Net Cash / (Debt) (TLm) Net Working Capital (TLm) Total Equity & Net Income (TLm)
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Source: Management Information.
Attractive white space
A
Şok Mini
D
Significant margin expansion
C
Robust LFL growth
B
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Şok New Store Potential (Stores)(2)
6.364
10.900
1.216 4.536
2012 2018 New Store Potential (mid-term) 2023P
Şok potential for additional 4.5k stores by 2023, supported by independent commercial consultant
Source: MK Novo Analysis. (1) Market potential for number of stores is not a time bound calculation. This approach, sourced from MK Novo analysis, is used for estimating the full potential that the market can reach by region based on various benchmarks. (2) As per MK Novo.
Store Potential for Discount Channel(1)
34k store potential based on regional bottom- up analysis of geographies and saturation
(2)
21k 13k 34k
2018 Additional White Space Total Potential
A
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Gain customer loyalty through continued operational excellence Increased brand awareness through effective marketing <2 years
38% >2 years
62%
Number of stores
Ramp-up from Young Store Portfolio Fresh has positive multiplier effect on average basket size and footfall Potential for bakery to drive growth
B
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Acquired UCZ Mağazacılık A.Ş in Dec-17 264 stores converted to Şok Mini as of 2018 Average store size: 81sqm with 1,382 SKUs Increased penetration in Istanbul D Şok mini
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(1) The Group calculates the EBITDA (earnings before interest, tax, depreciation and amortization, other income and expense royalty expense effect and Teközel wholesale operation) for the better understanding of investors and other interested parties about Group operations.
Q4 Q4 YE YE Consolidated Income Statement Summary (TLm) 2017 2018 ∆ (%) 2017 2018 ∆ (%) Net Sales 2.474,5 3.350,5 35,4% 8.920,3 12.060,8 35,2% Gross Profit 577,1 825,9 43,1% 2.054,5 2.934,0 42,8% Gross Profit % 23,3% 24,6% 1,3 Ppt 23,0% 24,3% 1,3 Ppt Marketing, selling & GA expenses (-) 507,0 703,5 38,8% 1.873,7 2.504,2 33,7% EBITDA 115,7 174,6 50,9% 354,3 630,2 77,9% EBITDA % 4,7% 5,2% 0,5 Ppt 4,0% 5,2% 1,3 Ppt EBITDAR 231,6 324,0 39,9% 764,8 1.176,7 53,9% EBITDAR % 9,4% 9,7% 0,3 Ppt 8,6% 9,8% 1,2 Ppt Net Profit / (Loss) for the Period (124,0) (54,9) 55,8% (434,0) 67,0 115,4%
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Consolidated Balance Sheet Summary (TLm) 31.12.17 31.12.18 Cash & cash equivalents 92,1 296,4 Trade receivables 267,6 127,2 Inventories 636,2 872,5 Other current assets 82,0 19,2 Total Current Assets 1.078,0 1.315,3 Property & equipment 849,5 977,6 Intangible assets 677,0 684,7 Other non-current assets 5,7 284,3 Non-Current Assets 1.532,3 1.946,6 Total Assets 2.610,3 3.261,9
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Consolidated Balance Sheet Summary (TLm) 31.12.17 31.12.18 Short term financial liabilities 1.504,9 177,4 Trade payables 2.193,1 2.484,5 Other current payables 795,7 183,2 Total Current Liabilities 4.493,6 2.845,1 Total Non Current Liabilities 301,7 153,8 Shareholder's equity (2.022,5) 261,8 Non-controlling interests (162,4) 1,2 Total Equity (2.185,0) 263,0 Total Liabilities and Equity 2.610,3 3.261,9
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Turkish Retail Investments B.V. 50% Gözde Girişim Ser. Yatır. Ortak. A.Ş 39% Templeton Strategic Emerging Markets Fund 10% Others 1% Yıldız Holding A.Ş 5% Turkish Retail Investments B.V. 23% Gözde Girişim
23% Turkish Holdings IV Cooperatief U.A. 6% Templeton Strategic Emerging Markets Fund IV.LDC 6% Others 1% Free Float 36%
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This presentation contains information and analysis on financial statements and is prepared for the sole purpose of providing information relating to Şok Marketler Ticaret A.Ş. (Şok Marketler). This presentation contains forward-looking statements which are based on certain expectations and assumptions at the time of publication of this presentation and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in these materials. Many of these risks and uncertainties relate to factors that are beyond Şok Marketler’s ability to control or estimate precisely, such as future market and economic conditions, the behavior of other market participants, the ability to successfully integrate acquired businesses and achieve anticipated cost savings and productivity gains as well as the actions of government regulators. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. This presentation merely serves the purpose of providing information. It neither represents an offer for sale nor for subscription of securities in any country, including Turkey. This presentation does not include an official offer of shares; an offering circular will not be published. This presentation is not allowed to be reproduced, distributed or published without permission or agreement of Şok Marketler.
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Çağrı DEMİREL Investor Relations Manager t: +90 850 221 6755 e: cagri.demirel@sokmarket.com.tr w: www.sokmarketyatirimciiliskileri.com Ziya Kayacan CFO t: +90 850 221 11 00 e: ziya.kayacan@sokmarket.com.tr w: www.sokmarketyatirimciiliskileri.com